In Pursuit of a New American Industrialism

More on Abatements. More on Downtown. And More on Where All the New People Will Come From.

Looks like the plan for residential tax abatements is making some headway in city council. Which could be a good thing. Or a bad thing. Check out the article. Seems like the main concern is which neighborhoods get the abatement. Here's how they picked the winners:

Administration representatives said that neighborhood eligibility is based on two factors. One is the neighborhood's score on a "vitality index" that factors in population losses, education levels, single-parent families, poverty, low home ownership, high vacancy, tax delinquency, violent crime and other factors. Another is a low level of new private building permits in 2005 and 2006.

But just hold on a second. Here's the list of neighborhoods that qualified:

Note that it includes Downtown. Huh? Downtown is BOOMING as a residential destination. Maybe that's just an illusion, you say? Well, no it's not. How do I know? Try this article. The Post-Gazette published it last September 24. It's headlined: "Downtown housing boom no illusion." Here's how it begins (I'll emphasize a few parts):

Downtown's residential renaissance is producing its first fruits.

Developers say they are having little trouble finding people willing to spend $250,000 or more to buy a Downtown condo or as much as $3,275 a month to rent an apartment.

Since opening at the end of April, the new Encore on 7th has leased 73 percent of its 151 units, with most rents ranging from $1,400 to $3,275 a month.

The Golden Triangle's newest condominium building, 151 First Side, has commitments on 43 of 80 units, with prices ranging from $250,000 to $500,000. Piatt Place at the former Lazarus-Macy's building has lined up buyers on 10 of 65 condos, with prices running from $335,400 to $634,500, in the four months the sales office has been open.

I haven't seen the bill. But I wonder. Does it automatically include Downtown, then apply the two factors to everywhere else? Or does Downtown qualify anyway?

Who developed these factors? When? How? Any chance they were reverse engineered to make sure certain places got included? I honestly have no idea. But this seems strange. We have very recently heard that Downtown in undergoing yet another Renaissance. That projects like Piatt Place and the PNC skyscraper deserved public support because they were going to revitalize the moribund Forbes-Fifth Corridor and give us a 24-hour downtown. Come on. You remember. It was only a few months ago. Then, after that, we got lots of promises about a new hockey arena and how it would help, er, revitalize downtown. Etc. Etc. Etc. Etc.

Etc.

Etc.

So which is it? If all those projects are going to work, why do we need to include Downtown in the abatement plan? If they aren't going to work, and Downtown still needs the abatements to thrive, why is the public pitching in to pay for those projects?

Is there a single other neighborhood in Pittsburgh that has received more in terms of attention and public investment than Downtown? As such, shouldn't it be dead last to receive these abatements, if we insist on picking some neighborhoods to receive them while leaving others out? Maybe we ought to just apply them across the board? Back to that original article about the abatements:

Going to a citywide tax break would mean giving up tax revenue in areas "where market-driven development activities are occurring," said city Finance Director Scott Kunka. "When you go citywide, we expect the program will cost the city $75 million over the life of the program." The abatement is, instead, designed so that new property revenue the city gives up is offset by gains in wage and other taxes.

But wait. Is he saying that "market driven development activities" are not going on Downtown? Where the housing market is just kicking the bejeezus out of the Piatt's expectations? And what about "gains in wages and other taxes"? Interesting. That means someone has a formula for how many of the residents drawn in by such development would come from outside the city. Which is what I have been looking for forever.

Anyone help me out on that? A while back I contacted Peduto's office about that question. I got some interesting results, which I never posted. Maybe I will. (Nothing scandalous. Like I said... just interesting.) I wonder if this plan, which seems to be the mayor's, uses a similar "formula."

Hmmmm...

UPDATE: I went back to the "No Illusions" story in the Post-Gazette to see if there was any mention of the "market" for development downtown. There was a lot of mention. Here are some snippets:

... It's a whole lot of housing to add to the 1,290 rental and condo units available in the Golden Triangle. But several studies over the past five years have indicated the demand is there to match it. They suggest the Downtown market can absorb 100 to 250 units a year...

... And a recent Carnegie Mellon University study found that demand for Downtown housing among young professionals far exceeds the supply. ...

... "We're very confident that the marketplace can hold and support this amount of residential Downtown [development] that's going to roll out over the next five years," said Greg Hammill, regional vice president of Howard Hanna Real Estate Services. ...

... Mr. Hammill said Howard Hanna's own marketing studies have suggested that demand exists. He said the Encore, with nearly three-quarters of its units rented, is a "great indication" of demand for Downtown living. "We're very optimistic about that market," he said. ...

Now, this is obviously pretty obtuse. What does "market" mean? Depends. But clearly, people have been telling us for well over a year that there is a huge demand for downtown housing, that certain public investments would help developers meet that demand, and that they were doing so quite nicely. Presto! Renaissance IV.

So, again, if we are trying to avoid using the abatements in areas that are already getting attention from "the market," uh...

Comments

to be fair, I think they are clear that the abatement Downtown is not judged by the vitality index. The vitality index criteria is used to determine what other neighborhoods are included in the program. I don't even think there was a vitality index created for Downtown in itself.

While I am on record saying the abatement should be universal if anything, it's a little unfair to throw out that reverse engineering charge if you don't have anything at all to base that on. They have put into the public record the details you ask about: The City's Department of City Planning came up with the vitality index and I suspect they would show it to you if you asked.

"I think they are clear that the abatement Downtown is not judged by the vitality index."

That's what I am asking. And not rhetorically. Maybe they have been clear elsewhere. But this article doesn't seem to touch on the issue at all. Which isn't all that strange. This is one of those midday things posted online, so I am guessing we will see more about it soon. Or maybe I am not reading it closely enough.

So maybe they did include downtown automatically. Like I said, I am open to that possibility. But the question remains: Why? Why not apply the index, if it is a worthwhile measure of vitality, investment, etc.? Maybe Downtown is a special case. But seriously. If you are worrying about abating residential properties that are going to get built anyway... doesn't it still seem like Downtown might be a bad candidate for the program? The publc has already sunk a lot of investment into that area. And I think at least some of it was sunk with the idea that we could collect some of it back in property taxes, etc. Now we are saying we are not going to collect said taxes?

That is, it seems like we have already dished out a lot of incentives for downtown living. And if you believe what's been said so far, those programs have been wildy successful. So successful that they are even exceeding Jack Piatt's expectations.

So... if the Vitality Index still included Downtown after all that investment, doesn't that call into the question the vitality created by these programs?

If, on the other hand, the area has already been effectively revitalized--and if we are currently measuring the need for abatements by measuring the lack of vitality--why would we automatically include Downtown in the mix? The investment is already happening there. We have heard it time and again. And we know we do not want to offer abatements for projects that the market is bringing online. Etc.

So... Why automatically include it?

I think I pose a valid question. If the index includes Downtown, claims about the effectiveness of recent projects seem to be in trouble. If, on the other hand, the index did not include Downtown but we are offering incentives there anyway, why? And last, given recent statements about which neighborhoods would be the best candidates for the abatement program, and given statements about the various ways in which Downtown has moved beyond existence as such a neighborhood, why would it get a pass?

I readily admitted that I don't know if they applied the index to Downtown. But even if they didn't there are still questions to ask.

Look, maybe someone can make the case that Downtown needs abatements because or despite the fact that it is already an incredibly vibrant place where people are already investing hundreds of millions of dollars in residential development. OK. Fine. But so far, all we have are some explanations about how abatements can help revitalize areas where development needs a jump start.

You could get around that by arguing for a blanket abatement. But that's not what's on the table. What we have is proposal that offers abatements in selected neighborhoods.

Which is a dangerous sort of thing. Because it gets political. (Yeah, I know. Big surprise.) But come on. If what they say about abatements is true, the last place we need them is Downtown. So why are we getting them there anyway? If we HAVE to cross some neighborhoods of the list, shouldn't downtown be first?

as best I can tell we are in agreement on the idea that an abatements ought to be applied throughout the city. In fact the news and you both miss the bigger news (to me at least) that came out of council deliberations that they tabled a plan Peduto had to study a wider tax abatement.

but nontheless the charges you throw out there: "reverse engineering" and implying the sources of the analysis are not fully disclosed are fairly serious and I believe baseless in and of themselves. They debate these details for hours in session (you could watch it all on TV if you wish) and the PG gives it a few inches and you pick apart the details not included in the paper. fair? balanced? spin?

Also, Downtown is just fundamentally a different kind of place, with minimal population that can be compared to other residential neighborhoods to make most neighborhood metrics very meaningful.. and that is their point I do believe.

but I will end one point that I think your description of a new abatement is incorrect. You seem to be saying that an abatement Downtown could take away the ability to collect tax on projects already built or in process. Without reading the proposed plan that shouldn't be the case. Abatements on incremental investment should be just that: applied to investment coming up. If you abate after the fact, I think that is called a plain old tax decrease. I would not be surprised if there are some loopholes in there for the newest projects though.

Seriously.. Call up City Planning. Ask if they will show you the analysis and see if you find any of it biased. I would be curious how that all works out and what you think. I think you are doing people a disservice to throw out there baseless presumptions that you could check easily enough. Trust me, there are enough things out there lacking transparency to get mad at.. this isn't one of them.

The whole point of blogging.. at least some blogging... is to offer a real-time reaction, or stream of consciousness, or whatever you want to call it. Don't believe me? Ask the Post-Gazette. Which offers the quick-hit articles like the one I linked to. Just to get stuff out there. I suspect they will offer more details tomorrow. So?

And with regard to hurling accusations at anyone, I did no such thing. I asked a question. A rhetorical one. That is, one with rhetorical intent. Did the index apply to downtown? EITHER WAY, it seems kind of strange. It's a pretty common rhetorical device, actually, akin to, "If he knew those facts, he's a bad guy. If he didn't, he's an idiot. Either way, I am not voting for him." Blah blah blah.

And transparency is not the issue at all. Is that what you think I am concerned about? Why? I never said that the meetings were not held in public. I never said they were done in some back room. YOU said that they made it clear that the Vitality Index did not apply to Downtown. I said I saw no indication of that in this article, but offered that you were quite possibly correct. And that I might see more of that soon. And as for other analysis, as i mentioned, I DID call Peduto's office about those other assumptions. And I said I got a reply. And that it was not scandalous. And that I might bolg about it. If there is a conspiracy theory, it is not originating here.